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On This Date: FDR Signed Social Security Into Law

by Countable | Updated on 8.14.18

On August 14, 1935 President Franklin D. Roosevelt signed the Social Security Act into law, creating the Social Security system that still provides federal assistance to the elderly today. The legislation was originally designed to offer vulnerable groups such as the elderly (Social Security’s primary focus today) and the unemployed protection from poverty through funding obtained from payroll taxes.

The last 82 years have seen Social Security survive challenges from the Supreme Court and become such a vital component of America’s social safety net that it was expanded 30 years after its creation. Its future is uncertain, however, as without reforms Social Security is expected to run out of money in 2034 due to the changing age demographics of the U.S. economy. Not only that, but both parties in Congress seem unable to reach a consensus on a fix.

Why was it needed?

During FDR’s first term as president, the U.S. was in the depths of the Great Depression which featured widespread unemployment (as high as 25 percent in 1933) and economic hardship. As a result, FDR embraced Social Security as part of the second round of his "New Deal" as a way to protect the elderly who could no longer work from living in poverty and to provide a safety net for those who lost their jobs.

With bipartisan support in Congress, the Social Security Act was passed with relative ease, and at a signing ceremony FDR called the bill "sound, needed, and patriotic legislation."

"We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age." — Franklin Delano Roosevelt.

What did the legislation do?

While the Social Security Act did authorize an initial infusion of federal funding for states so they could start providing pensions to the elderly and unemployment benefits to people out of work, the bulk the program’s funding was designed to come from payroll taxes. Initially, the tax was set at a rate of two percent that was taken out of each paycheck to provide benefits to the elderly, with the worker’s employer also responsible for paying a matching amount in payroll tax.

Unemployment insurance — essentially benefits people get when they’re out of work — was also included in the legislation, which was financed by a nationwide tax on all businesses with more than eight employees. States were encouraged to establish their own unemployment insurance programs, and by 1937 all of them (plus the District of Columbia and the then-territories of Alaska and Hawaii) had done so.

What impact has it had since then?

The creation of America’s first large-scale social insurance program was inevitably going to attract judicial scrutiny, and in 1937 the Supreme Court got its chance to weigh in. There were significant tensions between the executive and judicial branches after FDR’s ill-fated attempt to pack the Court with six new justices who’d be more accepting of his policies. But the Supreme Court upheld the constitutionality of Social Security in two separate rulings, nonetheless, on the grounds that the program fell within the federal government’s ability to tax and promote the general welfare.

Nearly 30 years after Social Security was created, President Lyndon Johnson expanded Social Security by creating Medicare and Medicaid — two federal health insurance programs aimed at helping the elderly and the poor, respectively. FDR had unsuccessfully tried to include similar public health insurance in an early version of the Social Security Act, but it was removed because of the objections of the healthcare industry.

Today, the biggest threat to Social Security’s future comes from the retirement of workers in the Baby Boomer generation, which has accelerated a long-running trend of increasing numbers of retirees being supported by a relatively smaller pool of workers. In 1950, each Social Security beneficiary was supported by 16.5 workers whose payroll taxes funded their benefits. By 2013, that ratio had fallen to 2.8 workers for each beneficiary, and this imbalance shows no signs of improving.

In their respective 2016 party platforms, Democrats called for expanding Social Security by raising taxes, while Republicans oppose tax increases and want to raise the retirement age for younger generations while keeping benefits the same for those in or near retirement. The bipartisan Simpson-Bowles Commission suggested slowing the growth of retirement benefits for medium- and high-income workers while gradually raising the retirement age to keep Social Security solvent.

Whether the recommendations of the Simpson-Bowles Commission will be adopted by Congress remains to be seen. But there is certainty in the plain arithmetic: Social Security — a program that provided benefits to over 50 million retirees in 2016 according to our partners at USAFacts — will face drastic benefit cuts by 2034 if no action is taken by Congress.

— Eric Revell

(Photo Credit: Social Security ) / Public Domain)

Countable

Written by Countable

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(64)
  • OlderNWiser
    08/15/2017
    ···

    I remember my grandparents shedding tears of joy on this day. My grandmother had worked as a maid and had been unable to save any money. My grandfather, who never attended any school and taught himself to read, but never learned to write, was incredibly proud of becoming a welder. For the first time these hard working people had a hope of surviving when I unable to earn an income anymore. At 75, I am unable to work, a situation I could not have imagined, but here it is. Without the Social Security into which I paid for 50 years, I would be desperate. Social Security and Medicare work, dating back to when we knew we needed to take care of each other. America, for us all.

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  • Edith
    Voted Excited
    08/14/2018
    ···

    The Social Security act and the GI bill created the huge middle class in this country. The people just want to be able to have a job that affords housing, to educate our kids, go to the Doctor & retire comfortably. I believe these programs are what made the US so prosperous.

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  • Mary
    Voted Apathetic
    08/14/2018
    ···

    Many of the financial problems with the system started and continue with congress raiding the system and NEVER returning the funds the in essence STOLE from hardworking Americans.

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  • Tooluser1
    Voted Angry
    08/14/2018
    ···

    And Congress has been stealing from it ever since. Social Security is a debt OWED to the American people and, with the exception of national defense, should come before ALL other Congressional spending. The funds paid into Social Security were NEVER Congress' to spend, and full restitution to the fund WITH interest should be made before ANY other budgetary priorities, beyond defense.

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  • burrkitty
    08/14/2018
    ···

    Next let’s make it illegal to steal funds out of it for other purposes or make cuts that will undermine it. All changes must be REVENUE NEUTRAL at minimum. SS money should have NO OTHER PURPOSE. Same for Medicare. Stop hijacking our protection systems.

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  • Edith
    Voted Excited
    08/14/2018
    ···

    The word socialism gets kicked around a lot in the comments in reference to Social Security. Just a reminder : Fed, St, local governments, all military, police, firemen, teachers salaries. All other people’s money paid to these people to perform much needed, & necessary jobs. This is socialism. That’s why it’s called Social, it’s for all of us paid by all of us.

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  • Vince
    Voted Angry
    08/14/2018
    ···

    And with the very same stroke of the pen set the US on a course for permanent deficit with one of the worst programs ever devised. Retirement should be privatized entirely. There is no need for the government to force us to save for retirement. If you can't save for yourself, then I'm sorry but you should sink. Your retirement is not my responsibility, and mine is not yours. Between SS, gold confiscation, wage freezing which led to employers offering health insurance which ultimately led to the health care crisis we know today, and other disasterous policies, FDR's actions have been estimated by expert economists to have extended the Great Depression by up to 8 years. Not to mention Japanese internment. FDR was one of the worst presidents in US history, easily bottom 5. A freedom taking tyrant in every sense of the word.

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  • Jan
    Voted Apathetic
    08/15/2018
    ···

    Will our members of congress take action?

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  • Stephanie
    08/15/2017
    ···

    Do not let Trump and the Republicans destroy social security and Medicare. The elderly and disabled depend on this.

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  • KansasTamale
    08/14/2018
    ···

    And the Republicans stole out of it, refuse to pay the interest, let alone the money back into it, and are trying to steal the rest of the money by saying its failing. THD FEDERAL GOVERNMENT HAS NOTHING TO DO WITH SOCIAL SECURITY EXCEPT DISTRIBUTING IT. KEEP SOCIAL SECURITY AND PUT THE MONEY BACK THAT HAS BEEN TAKEN OUT IN THE LAST 50 years.

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  • Carm
    Voted Excited
    08/14/2018
    ···

    America hated socialists so much they had to inact a law, so they'd stop electing him. I always love kicking around the argument today that had this been a program in 2018 no one on the right would want to pass it. Social security is a good program. It helped save many of people. It should never be cut or privatized. It should never be a barging chip used in any bill. I would like to see Seniors have the ability to make a tad bit more money without being penalized, tho. Inflation and the social security do not go hand-in-hand. People should be about to make a little extra cash if they can, or want to. This hurts no one.

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  • C
    08/15/2017
    ···

    Here's a sincere thank you to FDR. If only we currently had politicians who cared about people over their religious and ideological purity...

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  • H david
    Voted Excited
    08/14/2018
    ···

    It is time to tax all income for Social Security.

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  • Bobbi
    Voted Excited
    08/14/2018
    ···

    Systems like Social Security represent the best of the American Dream and I sincerely hope that we return to those values at some point soon. Too many people worry only about themselves and don't think about our society as a whole.

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  • Pru
    08/14/2018
    ···

    This is so amazing and created middle class!!! Paid into ss for over 50 years! Do not call this entitlement, it is filled with sweat!!!

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  • Cindy
    Voted Excited
    08/14/2018
    ···

    The allotment needs to keep Pace with the cost of living

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  • L0u15e.N032L
    08/16/2017
    ···

    And now so many in Congress want to destroy the only pension many will have. What is wrong? Why are so many in power so mean and greedy?

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  • JayFeat
    08/15/2017
    ···

    We absolutely cannot allow private insurers to have their way with the citizens of this great nation. They exist for profit and lay the opposite roll of social security in "promoting the general welfare". Social security needs to be expanded with subsequent taxes on large corporations and the wealthiest Americans.

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  • Joyce
    Voted Excited
    08/14/2018
    ···

    GOOD FOR FDR!!! AND MAY SOCIAL SECURITY, S.S.I./S.S.D. NEVER, EVER, EVER LEAVE FOR ALL SENIORS/DISABLED PEOPLE WHO REALLY AND TRULY NEED IT FOR ALWAYS!!!

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  • James
    08/15/2017
    ···

    Don't just point your fingers at Trump and the Republicans! For decades presidents and congress have been dipping into Social Security for their fiscal short falls! LBJ and his Democrat congress used it to pay for their escalated war in Vietnam! Half of the people of working age in this country are drawing Social Security disability! Bunch of lazy good for nothings that don't feel like working so they go to some doctor to sign off on their claim and us real working folks that are working and paying into it are getting the short end of the stick! As o approach sixty I am worried! Find out who the dead beats are and kick em off of it! Entitlement reform needs to get done!

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  • Pamela
    08/15/2017
    ···

    Now he was the best, he said something and you knew was true. He put America back to work, not lie to the public like we wouldn't know the difference. He didn't fill his cabinet with millionaires who had no experience. He told truth

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  • Sand
    08/03/2018
    ···

    They should not touch Social Security and Medicare. We have paid into it all our lives and to deprive Americans of their money is a crime!

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  • Steven
    08/15/2017
    ···

    Some of the first legislation that take away peoples responsibility and family's responsibility of taking care of each other. Was originally meant to be a temporary yet but once people get used to The government taking care of them with other peoples money first step to socialism. Only problem with socialism and social security is you run out of other peoples money. It is and I always has Been a Democratic Ponzi scheme.

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